Saudi Arabia’s oil minister Ali al-Naimi said his country would act to move oil prices lower and keep them there. His comments caused a sell off in crude. His case for lower oil is not just his nation’s production capacity. It is also the fact that he believes global oil supply is plentiful and that there is no supply and demand reason for crude’s recent price increase.
The drop in prices many be short lived. The Saudis have made pledges before. The US and allies have said they may release some of their strategic oil reserve. GDP growth has tempered in the largest developing nations. But these things have been trumped by the threat that Iran will close the Stait of Hormuz through which about 20% of crude supply is shipped. And,there is hard evidence that refinery capacity is down because plants are off line for upgrades or have been shut completely due to lack of profits.